DCF Studio

    CVE.TO · TOR · Energy

    Cenovus Energy Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 24.77

    Market price

    CAD 45.62

    Implied upside

    -45.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 24.77-45.7%
    Exit multiple
    CAD 24.90-45.4%
    Market price
    CAD 45.62

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 47.6bnCAD 43.0bnCAD 38.8bnCAD 35.0bnCAD 31.6bn-9.8%
    EBITCAD 5.0bnCAD 4.5bnCAD 4.1bnCAD 3.7bnCAD 3.3bn-9.8%
    NOPATCAD 4.0bnCAD 3.6bnCAD 3.2bnCAD 2.9bnCAD 2.6bn-9.8%
    Add depreciation & amortisationCAD 3.9bnCAD 3.5bnCAD 3.2bnCAD 2.9bnCAD 2.6bn-9.8%
    Less capital expenditureCAD -3.7bnCAD -3.3bnCAD -3.0bnCAD -2.7bnCAD -2.4bn-9.8%
    Less increase in working capitalCAD -376.7mCAD -340.0mCAD -306.8mCAD -276.9mCAD -249.9m-9.8%
    Free cashflow to firmCAD 3.8bnCAD 3.4bnCAD 3.1bnCAD 2.8bnCAD 2.5bn-9.8%
    Discount factor0.96870.90910.85310.80060.7513-
    Present valueCAD 3.7bnCAD 3.1bnCAD 2.6bnCAD 2.2bnCAD 1.9bn-15.3%
    Present Value Of The ForecastCAD 13.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.664Reported 0.499, pulled toward 1.0 (Blume)
    Cost of equity6.95%Risk-free + beta x equity risk premium
    Cost of debt5.32%Interest expense / average total debt
    Market capitalisationCAD 84.1bn85.6% of capital
    Total debtCAD 14.2bn14.4% of capital, book value as a proxy
    Tax rate20.6%Effective, capped at statutory
    WACC6.56%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareCAD 24.77

    76% of EV

    Forecast FCFF, final year
    CAD 2.5bn
    Capex at depreciation, working capital in reinvestment
    CAD 2.9bn
    Less reinvestment at g/ROIC (21.4% of NOPAT)
    CAD -615.2m
    Capitalised
    CAD 2.3bn
    ROIC (reported)
    11.7%
    Terminal value, undiscounted
    CAD 57.2bn
    Terminal value, discounted
    CAD 43.0bn
    Enterprise value
    CAD 56.5bn
    Less net debt
    CAD 11.5bn
    Equity value
    CAD 45.1bn

    Exit at 9.7x EBITDA

    Value per shareCAD 24.90

    76% of EV

    Terminal value, undiscounted
    CAD 57.5bn
    Terminal value, discounted
    CAD 43.2bn
    Enterprise value
    CAD 56.8bn
    Less net debt
    CAD 11.5bn
    Equity value
    CAD 45.3bn

    Spread between methods: 1%.

    Sensitivity

    Value per share (CAD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.56%38.9344.2652.1565.0890.14
    5.56%28.3630.7934.0038.4445.01
    6.56%21.9623.2224.7726.7529.35
    7.56%17.6618.3519.1820.1621.39
    8.56%14.5814.9715.4215.9416.55

    Outlined: this model. Green text: above today's price of 45.62. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-9.8%0.7%+10.4pp
    EBIT margin10.5%18.0%+7.5pp
    Discount rate6.6%4.8%-1.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.